Retirement portfolio suggestion needed [India expat in US]

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Topic Author
akjohn024
Posts: 30
Joined: Mon Aug 28, 2023 1:29 am

Retirement portfolio suggestion needed [India expat in US]

Post by akjohn024 »

Hi,
I am looking for suggestion on my portfolio. Bellow is my allocation. Please check and advice, what would you recommend. If you feel, I missed some important factor, please let me know.

Emergency funds: 6 months of expenses.

Debt: None.

Tax Filing Status: Married Filing Jointly

Tax Rate: 22% Federal, 0% State

State of Residence: Washington State

Age: 46

Current retirement assets $249,170

Taxable
37% Fidelity Government Money Market Fund (SPAXX) (0.42%)
8.5% Vanguard Total World Stock Index Fund ETF (VT) (0.07%)

His 401k
42% Fidelity Freedom 2040 Fund Class K6 (FHTKX) (0.44%)

His Roth IRA at Fidelity
2.66% Fidelity Government Money Market Fund (SPAXX) (0.42%)

Her Roth IRA at Fidelity
2.66% Fidelity Government Money Market Fund (SPAXX) (0.42%)

His Rollover IRA at Fidelity
6.86% Fidelity Freedom Index 2040 Fund Investor Class (FBIFX) (0.12%)
-----------------------------------------------------
Questions:
1. I am 46 (working), wife is 39 (non-working) with 8 years old kid. My retirement is still at least 15 years far and I don't need this money till my retirement. My regular expenses can be made by my salary. After all expenses, I can save $1200 per pay check. Where should I move this saving?

2. Every month I am moving $5000 from money market to VT, from last 4 months. Instead of keeping cash in money market (which is still giving 4.99%(, should I start moving bigger chunk of money to VT, if that is suggested one? I thought, it will be better idea than putting it in lumpsum. But with rate of $5000 each month, looks like it will take long time, especially when I am adding around $2400 each month from my salary saving to Fidelity money market.

3. Would you change any other allocation or any other suggestion?

Please advice. Thanks
Valuethinker
Posts: 49129
Joined: Fri May 11, 2007 11:07 am

Re: Retirement portfolio suggestion needed [India expat in US]

Post by Valuethinker »

akjohn024 wrote: Tue Apr 02, 2024 9:30 am Hi,
I am looking for suggestion on my portfolio. Bellow is my allocation. Please check and advice, what would you recommend. If you feel, I missed some important factor, please let me know.

Emergency funds: 6 months of expenses.

Debt: None.

Tax Filing Status: Married Filing Jointly

Tax Rate: 22% Federal, 0% State

State of Residence: Washington State

Age: 46

Current retirement assets $249,170

Taxable
37% Fidelity Government Money Market Fund (SPAXX) (0.42%)
8.5% Vanguard Total World Stock Index Fund ETF (VT) (0.07%)

His 401k
42% Fidelity Freedom 2040 Fund Class K6 (FHTKX) (0.44%)

His Roth IRA at Fidelity
2.66% Fidelity Government Money Market Fund (SPAXX) (0.42%)

Her Roth IRA at Fidelity
2.66% Fidelity Government Money Market Fund (SPAXX) (0.42%)

His Rollover IRA at Fidelity
6.86% Fidelity Freedom Index 2040 Fund Investor Class (FBIFX) (0.12%)
-----------------------------------------------------
Questions:
1. I am 46 (working), wife is 39 (non-working) with 8 years old kid. My retirement is still at least 15 years far and I don't need this money till my retirement. My regular expenses can be made by my salary. After all expenses, I can save $1200 per pay check. Where should I move this saving?

2. Every month I am moving $5000 from money market to VT, from last 4 months. Instead of keeping cash in money market (which is still giving 4.99%(, should I start moving bigger chunk of money to VT, if that is suggested one? I thought, it will be better idea than putting it in lumpsum. But with rate of $5000 each month, looks like it will take long time, especially when I am adding around $2400 each month from my salary saving to Fidelity money market.

3. Would you change any other allocation or any other suggestion?

Please advice. Thanks
With 15+ years to retirement, unless you anticipate a need for cash sooner than that (to pay for college tuition, or to buy a home), then you should have, in my view:

- more equities. As much as 60-70% of your total retirement savings
- bonds. At least 20%

So you could have 10% Money Markets + 20% bonds (US Intermediate Term Treasury bonds, for example) + 70% global equity index (or to get lower fees, something like 40-45% US stocks, 20-25% non US). An alternative would be a Target Retirement Date fund set for your likely retirement date (which would have shifting proportions of bonds and stocks, over time).

It doesn't make any difference whether you make this move all in one go, or over time. I would suggest you should aim to do it within say 12 months, however. By delaying a similar move, I lost myself +20% returns in the stock market over less than a year.

If you contemplate retiring to India you may wish to think about buying a property you can retire there to, as well. However that's very complex. If for example you have grandchildren in USA, then it might be much less likely ie you cannot be entirely certain. I am aware buying a property in India can be difficult (I knew a colleague who owned a "palace" in Calcutta, but of course there were tenants who had permanent rights to live there).
yogesh
Posts: 731
Joined: Thu Oct 11, 2012 6:20 pm

Re: Retirement portfolio suggestion needed [India expat in US]

Post by yogesh »

Your fund allocation is good. Put those Roth IRA to work as well with either TD2040 or VTI/VXUS. Avoid buying VT in Roth because that could result in wash sales with your taxable VT.

Lump sum buy of VT is good idea

Otherwise you are doing the right things
Emergency: FDIC | Taxable: VTI | Retirement: TD2035
Topic Author
akjohn024
Posts: 30
Joined: Mon Aug 28, 2023 1:29 am

Re: Retirement portfolio suggestion needed [India expat in US]

Post by akjohn024 »

Valuethinker wrote: Tue Apr 02, 2024 10:02 am
akjohn024 wrote: Tue Apr 02, 2024 9:30 am Hi,
I am looking for suggestion on my portfolio. Bellow is my allocation. Please check and advice, what would you recommend. If you feel, I missed some important factor, please let me know.

Emergency funds: 6 months of expenses.

Debt: None.

Tax Filing Status: Married Filing Jointly

Tax Rate: 22% Federal, 0% State

State of Residence: Washington State

Age: 46

Current retirement assets $249,170

Taxable
37% Fidelity Government Money Market Fund (SPAXX) (0.42%)
8.5% Vanguard Total World Stock Index Fund ETF (VT) (0.07%)

His 401k
42% Fidelity Freedom 2040 Fund Class K6 (FHTKX) (0.44%)

His Roth IRA at Fidelity
2.66% Fidelity Government Money Market Fund (SPAXX) (0.42%)

Her Roth IRA at Fidelity
2.66% Fidelity Government Money Market Fund (SPAXX) (0.42%)

His Rollover IRA at Fidelity
6.86% Fidelity Freedom Index 2040 Fund Investor Class (FBIFX) (0.12%)
-----------------------------------------------------
Questions:
1. I am 46 (working), wife is 39 (non-working) with 8 years old kid. My retirement is still at least 15 years far and I don't need this money till my retirement. My regular expenses can be made by my salary. After all expenses, I can save $1200 per pay check. Where should I move this saving?

2. Every month I am moving $5000 from money market to VT, from last 4 months. Instead of keeping cash in money market (which is still giving 4.99%(, should I start moving bigger chunk of money to VT, if that is suggested one? I thought, it will be better idea than putting it in lumpsum. But with rate of $5000 each month, looks like it will take long time, especially when I am adding around $2400 each month from my salary saving to Fidelity money market.

3. Would you change any other allocation or any other suggestion?

Please advice. Thanks
With 15+ years to retirement, unless you anticipate a need for cash sooner than that (to pay for college tuition, or to buy a home), then you should have, in my view:

- more equities. As much as 60-70% of your total retirement savings
- bonds. At least 20%

So you could have 10% Money Markets + 20% bonds (US Intermediate Term Treasury bonds, for example) + 70% global equity index (or to get lower fees, something like 40-45% US stocks, 20-25% non US). An alternative would be a Target Retirement Date fund set for your likely retirement date (which would have shifting proportions of bonds and stocks, over time).

It doesn't make any difference whether you make this move all in one go, or over time. I would suggest you should aim to do it within say 12 months, however. By delaying a similar move, I lost myself +20% returns in the stock market over less than a year.

If you contemplate retiring to India you may wish to think about buying a property you can retire there to, as well. However that's very complex. If for example you have grandchildren in USA, then it might be much less likely ie you cannot be entirely certain. I am aware buying a property in India can be difficult (I knew a colleague who owned a "palace" in Calcutta, but of course there were tenants who had permanent rights to live there).
My initial thought was, if market dips a little then I can get VT in lesser price, but it kept growing well. That's why I was buying it in little chunks.

Regarding buying property in India was always a good consideration for us. If we plan to retire in India, we have one apartment there, though it will be old by then, i.e. in 16 years.
Topic Author
akjohn024
Posts: 30
Joined: Mon Aug 28, 2023 1:29 am

Re: Retirement portfolio suggestion needed [India expat in US]

Post by akjohn024 »

yogesh wrote: Tue Apr 02, 2024 10:12 am Your fund allocation is good. Put those Roth IRA to work as well with either TD2040 or VTI/VXUS. Avoid buying VT in Roth because that could result in wash sales with your taxable VT.

Lump sum buy of VT is good idea

Otherwise you are doing the right things
My initial thought was, if market dips a little then I can get VT in lesser price, but it kept growing well. That's why I was buying it in little chunks.

I have all my funds in Fidelity. Is TD2040 or VTI/VXUS there on Fidelity? I can move both ROTH IRA funds into your suggested ones.
realclemsongrad
Posts: 366
Joined: Sat May 16, 2020 4:37 pm

Re: Retirement portfolio suggestion needed [India expat in US]

Post by realclemsongrad »

akjohn024 wrote: Tue Apr 02, 2024 12:30 pm
Valuethinker wrote: Tue Apr 02, 2024 10:02 am
akjohn024 wrote: Tue Apr 02, 2024 9:30 am Hi,
I am looking for suggestion on my portfolio. Bellow is my allocation. Please check and advice, what would you recommend. If you feel, I missed some important factor, please let me know.

Emergency funds: 6 months of expenses.

Debt: None.

Tax Filing Status: Married Filing Jointly

Tax Rate: 22% Federal, 0% State

State of Residence: Washington State

Age: 46

Current retirement assets $249,170

Taxable
37% Fidelity Government Money Market Fund (SPAXX) (0.42%)
8.5% Vanguard Total World Stock Index Fund ETF (VT) (0.07%)

His 401k
42% Fidelity Freedom 2040 Fund Class K6 (FHTKX) (0.44%)

His Roth IRA at Fidelity
2.66% Fidelity Government Money Market Fund (SPAXX) (0.42%)

Her Roth IRA at Fidelity
2.66% Fidelity Government Money Market Fund (SPAXX) (0.42%)

His Rollover IRA at Fidelity
6.86% Fidelity Freedom Index 2040 Fund Investor Class (FBIFX) (0.12%)
-----------------------------------------------------
Questions:
1. I am 46 (working), wife is 39 (non-working) with 8 years old kid. My retirement is still at least 15 years far and I don't need this money till my retirement. My regular expenses can be made by my salary. After all expenses, I can save $1200 per pay check. Where should I move this saving?

2. Every month I am moving $5000 from money market to VT, from last 4 months. Instead of keeping cash in money market (which is still giving 4.99%(, should I start moving bigger chunk of money to VT, if that is suggested one? I thought, it will be better idea than putting it in lumpsum. But with rate of $5000 each month, looks like it will take long time, especially when I am adding around $2400 each month from my salary saving to Fidelity money market.

3. Would you change any other allocation or any other suggestion?

Please advice. Thanks
With 15+ years to retirement, unless you anticipate a need for cash sooner than that (to pay for college tuition, or to buy a home), then you should have, in my view:

- more equities. As much as 60-70% of your total retirement savings
- bonds. At least 20%

So you could have 10% Money Markets + 20% bonds (US Intermediate Term Treasury bonds, for example) + 70% global equity index (or to get lower fees, something like 40-45% US stocks, 20-25% non US). An alternative would be a Target Retirement Date fund set for your likely retirement date (which would have shifting proportions of bonds and stocks, over time).

It doesn't make any difference whether you make this move all in one go, or over time. I would suggest you should aim to do it within say 12 months, however. By delaying a similar move, I lost myself +20% returns in the stock market over less than a year.

If you contemplate retiring to India you may wish to think about buying a property you can retire there to, as well. However that's very complex. If for example you have grandchildren in USA, then it might be much less likely ie you cannot be entirely certain. I am aware buying a property in India can be difficult (I knew a colleague who owned a "palace" in Calcutta, but of course there were tenants who had permanent rights to live there).
My initial thought was, if market dips a little then I can get VT in lesser price, but it kept growing well. That's why I was buying it in little chunks.

Regarding buying property in India was always a good consideration for us. If we plan to retire in India, we have one apartment there, though it will be old by then, i.e. in 16 years.
I used to think this way on being able to buy in the dip and end up missing the rally. I recommended doing lump sum or atleast doing DCA on the first day or something more automatic regardless of how the market is doing. Over all except that you are doing well.
lakpr
Posts: 11788
Joined: Fri Mar 18, 2011 9:59 am

Re: Retirement portfolio suggestion needed [India expat in US]

Post by lakpr »

My one suggestion would be to make Roth 401(k) contributions at workplace, instead of Traditional 401(k), but only for 2024 and 2025. The reason for this recommendation is that the current 12% and 22% tax brackets will be no more starting in 2026 (TCJA sunset). The marginal tax brackets at that time will be 15% and 25%. If you will be continuing to work at that time, depending on your exact income, you may find yourselves in either 25% or 28% tax bracket, basically a 3% or 6% increase on the marginal tax.

Two years worth of $23k contributions each is not going to make or derail your eventual retirement, but if the tax rates DID go up in 2026 you would be boy-oh-glad to have made at least $46k to Roth 401(k) when the tax rates were low.
Topic Author
akjohn024
Posts: 30
Joined: Mon Aug 28, 2023 1:29 am

Re: Retirement portfolio suggestion needed [India expat in US]

Post by akjohn024 »

lakpr wrote: Tue Apr 02, 2024 1:02 pm My one suggestion would be to make Roth 401(k) contributions at workplace, instead of Traditional 401(k), but only for 2024 and 2025. The reason for this recommendation is that the current 12% and 22% tax brackets will be no more starting in 2026 (TCJA sunset). The marginal tax brackets at that time will be 15% and 25%. If you will be continuing to work at that time, depending on your exact income, you may find yourselves in either 25% or 28% tax bracket, basically a 3% or 6% increase on the marginal tax.

Two years worth of $23k contributions each is not going to make or derail your eventual retirement, but if the tax rates DID go up in 2026 you would be boy-oh-glad to have made at least $46k to Roth 401(k) when the tax rates were low.
That could be good tip. Thanks :-)
yogesh
Posts: 731
Joined: Thu Oct 11, 2012 6:20 pm

Re: Retirement portfolio suggestion needed [India expat in US]

Post by yogesh »

akjohn024 wrote: Tue Apr 02, 2024 12:32 pm
yogesh wrote: Tue Apr 02, 2024 10:12 am Your fund allocation is good. Put those Roth IRA to work as well with either TD2040 or VTI/VXUS. Avoid buying VT in Roth because that could result in wash sales with your taxable VT.

Lump sum buy of VT is good idea

Otherwise you are doing the right things
My initial thought was, if market dips a little then I can get VT in lesser price, but it kept growing well. That's why I was buying it in little chunks.

I have all my funds in Fidelity. Is TD2040 or VTI/VXUS there on Fidelity? I can move both ROTH IRA funds into your suggested ones.
Yes Fidelity has TD2040 Fidelity freedom index 2040
Emergency: FDIC | Taxable: VTI | Retirement: TD2035
Topic Author
akjohn024
Posts: 30
Joined: Mon Aug 28, 2023 1:29 am

Re: Retirement portfolio suggestion needed [India expat in US]

Post by akjohn024 »

yogesh wrote: Tue Apr 02, 2024 4:04 pm
akjohn024 wrote: Tue Apr 02, 2024 12:32 pm
yogesh wrote: Tue Apr 02, 2024 10:12 am Your fund allocation is good. Put those Roth IRA to work as well with either TD2040 or VTI/VXUS. Avoid buying VT in Roth because that could result in wash sales with your taxable VT.

Lump sum buy of VT is good idea

Otherwise you are doing the right things
My initial thought was, if market dips a little then I can get VT in lesser price, but it kept growing well. That's why I was buying it in little chunks.

I have all my funds in Fidelity. Is TD2040 or VTI/VXUS there on Fidelity? I can move both ROTH IRA funds into your suggested ones.
Yes Fidelity has TD2040 Fidelity freedom index 2040
Is that "Fidelity Freedom® Index 2040 Fund Institutional Premium Class" (FFIZX) ? I can move my 6600 and wife's 6600 ROTH IRA to this one.
That I invested in 2023. I can/should do same 6500+6500 now for 2024 too ?
lakpr
Posts: 11788
Joined: Fri Mar 18, 2011 9:59 am

Re: Retirement portfolio suggestion needed [India expat in US]

Post by lakpr »

The limit is $7,000 for Roth IRA for 2024, not $6,500.
Topic Author
akjohn024
Posts: 30
Joined: Mon Aug 28, 2023 1:29 am

Re: Retirement portfolio suggestion needed [India expat in US]

Post by akjohn024 »

lakpr wrote: Wed Apr 03, 2024 3:38 am The limit is $7,000 for Roth IRA for 2024, not $6,500.
Thanks for correction.
If I need to contribute 7000+7000 to ROTH IRA, I would take it from money which I am keeping in Fidelity Money Market. Should I do it, depend on how my portfolio is looking?
lakpr
Posts: 11788
Joined: Fri Mar 18, 2011 9:59 am

Re: Retirement portfolio suggestion needed [India expat in US]

Post by lakpr »

akjohn024 wrote: Wed Apr 03, 2024 4:27 am
lakpr wrote: Wed Apr 03, 2024 3:38 am The limit is $7,000 for Roth IRA for 2024, not $6,500.
Thanks for correction.
If I need to contribute 7000+7000 to ROTH IRA, I would take it from money which I am keeping in Fidelity Money Market. Should I do it, depend on how my portfolio is looking?
I would do $6,500 + $6,500 for 2023 as quickly as possible, since April 15 is the deadline for contributing to Roth IRA for 2023. That opportunity will be lost once the deadline passes. [Not sure if you already did contribute for 2023, for both, hence wrote this]

The $7,000 + $7,000 can wait until April 15 of next year. However, how much do you earn exactly? Direct Roth IRA contributions are limited if your income exceeds some threshold, I haven't looked it up but it is something like $216k income. If you are sure you will not exceed it in 2024, I suggest to contribute right now (more time in the market). If there are any doubts, I suggest waiting until at least January 2025.

Edit: looked them up, the limits are $218k AGI for 2023, $230k AGI for 2024
Topic Author
akjohn024
Posts: 30
Joined: Mon Aug 28, 2023 1:29 am

Re: Retirement portfolio suggestion needed [India expat in US]

Post by akjohn024 »

lakpr wrote: Wed Apr 03, 2024 6:40 am
akjohn024 wrote: Wed Apr 03, 2024 4:27 am
lakpr wrote: Wed Apr 03, 2024 3:38 am The limit is $7,000 for Roth IRA for 2024, not $6,500.
Thanks for correction.
If I need to contribute 7000+7000 to ROTH IRA, I would take it from money which I am keeping in Fidelity Money Market. Should I do it, depend on how my portfolio is looking?
I would do $6,500 + $6,500 for 2023 as quickly as possible, since April 15 is the deadline for contributing to Roth IRA for 2023. That opportunity will be lost once the deadline passes. [Not sure if you already did contribute for 2023, for both, hence wrote this]

The $7,000 + $7,000 can wait until April 15 of next year. However, how much do you earn exactly? Direct Roth IRA contributions are limited if your income exceeds some threshold, I haven't looked it up but it is something like $216k income. If you are sure you will not exceed it in 2024, I suggest to contribute right now (more time in the market). If there are any doubts, I suggest waiting until at least January 2025.

Edit: looked them up, the limits are $218k AGI for 2023, $230k AGI for 2024
I contributed 6500 for me and 6500 for my wife in October 2023. My annual earning is $132k and per pay check I get $3163 in-hand, after tax and deductions.
lakpr
Posts: 11788
Joined: Fri Mar 18, 2011 9:59 am

Re: Retirement portfolio suggestion needed [India expat in US]

Post by lakpr »

akjohn024 wrote: Wed Apr 03, 2024 7:29 am I contributed 6500 for me and 6500 for my wife in October 2023. My annual earning is $132k and per pay check I get $3163 in-hand, after tax and deductions.
So discounting the possibility that you will be getting a $100k bonus before the end of the year 2024, I suggest you do contribute the $14k for 2024 right now. More time in the market ... if you wait you may miss out on any rallies (and equally likely, you will miss out any downturns too)
yogesh
Posts: 731
Joined: Thu Oct 11, 2012 6:20 pm

Re: Retirement portfolio suggestion needed [India expat in US]

Post by yogesh »

akjohn024 wrote: Wed Apr 03, 2024 12:47 am
yogesh wrote: Tue Apr 02, 2024 4:04 pm
akjohn024 wrote: Tue Apr 02, 2024 12:32 pm
yogesh wrote: Tue Apr 02, 2024 10:12 am Your fund allocation is good. Put those Roth IRA to work as well with either TD2040 or VTI/VXUS. Avoid buying VT in Roth because that could result in wash sales with your taxable VT.

Lump sum buy of VT is good idea

Otherwise you are doing the right things
My initial thought was, if market dips a little then I can get VT in lesser price, but it kept growing well. That's why I was buying it in little chunks.

I have all my funds in Fidelity. Is TD2040 or VTI/VXUS there on Fidelity? I can move both ROTH IRA funds into your suggested ones.
Yes Fidelity has TD2040 Fidelity freedom index 2040
Is that "Fidelity Freedom® Index 2040 Fund Institutional Premium Class" (FFIZX) ? I can move my 6600 and wife's 6600 ROTH IRA to this one.
That I invested in 2023. I can/should do same 6500+6500 now for 2024 too ?
FBIFX
https://fundresearch.fidelity.com/mutua ... /315793885
Emergency: FDIC | Taxable: VTI | Retirement: TD2035
lakpr
Posts: 11788
Joined: Fri Mar 18, 2011 9:59 am

Re: Retirement portfolio suggestion needed [India expat in US]

Post by lakpr »

yogesh wrote: Wed Apr 03, 2024 3:30 pm
akjohn024 wrote: Wed Apr 03, 2024 12:47 am
Is that "Fidelity Freedom® Index 2040 Fund Institutional Premium Class" (FFIZX) ? I can move my 6600 and wife's 6600 ROTH IRA to this one.
That I invested in 2023. I can/should do same 6500+6500 now for 2024 too ?
FBIFX
https://fundresearch.fidelity.com/mutua ... /315793885
@akjohn024,

They are just different share classes of the same fund (FFIZX is Institutional version, FBIFX is the Investor version).
FFIZX requires a minimum investment of $5 Million, whereas there is no minimum for FBIFX.
Topic Author
akjohn024
Posts: 30
Joined: Mon Aug 28, 2023 1:29 am

Re: Retirement portfolio suggestion needed [India expat in US]

Post by akjohn024 »

Thanks.
Will move both ROTH IRA (6650 + 6650) of last year and 7000 + 7000 of this year into FBIFX, i.e. total of $27300.
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